Freep.com recently posted an article discussing some tax breaks that are especially helpful during the economic downturn. You can find a snippet of the article below, but the full story can be read here.
If you lost a job or earned less money during the recession, you could be shocked to discover something that could generate a bigger income tax refund than you'd imagine.
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States with high unemployment, including Michigan, are seeing more families with children who qualify for the Earned Income Tax Credit -- a refundable credit worth up to $4,824 in 2008 for some strapped families with two or more qualifying children.
"The earned income credit kicks in more readily than before for some of our clients because they're making less money," said Lew Elbert, a retired salaried employee from General Motors Corp. and an Accounting Aid Society volunteer.
Taxpayers could take advantage of several tax breaks to save money in rough economic times. The key thing, of course, is to file by Wednesday -- even if you do not have enough money to pay a bill.
Here's some tax help for cash-challenged taxpayers:
• Who gets the Earned Income Credit?
You may be able to take the Earned Income Tax Credit if you have more than one qualifying child and your earned income was less than $38,646 or less than $41,646 if married filing jointly.
The income limits drop if you have one qualifying child or no children. The maximum credit for workers with no kids is $438.
The credit can be complicated. You must have a valid Social Security number, among other rules, and earned income must come from employment or self-employment.
Low- to moderate-income Michigan residents now can get a new state Earned Income Tax Credit by filing a state return. The Michigan credit is 10% of the federal credit on the 2008 return.
• Who gets the Michigan Homestead Property Tax Credit?
If you've got a modest income and rent or own a home, you might qualify if all of this is true: The place where you have your permanent home is in Michigan. Vacation homes don't count. You were a resident of Michigan for at least 6 months during the year. You own or rent and resided in a Michigan homestead on which property taxes were levied. Your household income is less than or equal to $82,650.